Analysis: What Is Driving Down China’s Crude Demand?

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pictureIn the first seven months of the year, China’s crude imports averaged at 10.9 million barrels per day (bpd), a 2.9% drop from 11.22 million bpd during the same period in 2023

China’s consumption of crude oil has been affected by an economic slowdown, sluggish construction and manufacturing sectors, and extreme weather events, but its shift to new energy vehicles is also dramatically reducing its reliance on fossil fuels.

Since July, international oil prices have dropped sharply, with Brent crude falling from nearly $90 to below $70. This is largely attributed to weakening demand, particularly from China.

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China's economic slowdown and increased adoption of new energy vehicles have reduced its crude oil consumption.
Brent crude prices fell from nearly $90 to below $70 since July due to weakening demand, especially from China.
NEVs reached a 53.9% penetration rate in China, reducing gasoline consumption and expected to lower it further as sales surpass 10 million units this year.

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Who’s Who

Huatai Futures: Huatai Futures is referenced in the article for its report on the impact of new energy vehicles (NEVs) on gasoline consumption in China. The report highlights that NEVs have already led to a 10% reduction in gasoline consumption. Huatai Futures forecasts that domestic NEV sales will exceed 10 million this year, raising total ownership to 30 million and cutting gasoline consumption by over 15%, posing long-term challenges for fuel demand.

S&P Global: S&P Global, in a recent report, indicated that China's oil demand may have already peaked or is likely to peak soon. This aligns with trends of declining crude imports and the significant rise in new energy vehicles, which are expected to reduce gasoline consumption substantially in the coming years.

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What Happened When

2017：: China became the world's largest importer of crude oil, surpassing the United States.

By the first seven months of 2024：: China’s crude imports averaged at 10.9 million barrels per day (bpd), a 2.9% drop from 11.22 million bpd during the same period in 2023.